Italy Post-World War I and the Political, Social, Economic Structure

A problem that has dogged the Italian economy in recent years is the government's inefficient levying of direct taxes. Since the creation of the republic after World War II, the economy has relied on public loans to finance public works and enterprises, and many Italians did not start paying income tax until the 1970s. Italy also has a thriving underground economy that inevitably deprives the state of revenue. While indirect taxes, including VAT (value-added taxes), have been raised several times throughout the 1980s, moves to enforce payment of direct taxes have met with resistance. In 1985 a bill was introduced to curtail tax evasion among the self-employed, leading to a one-day national strike. The 1988 budget actually contained proposals to decrease direct taxation, as a result of union pressure, but these were postponed because of fears of rising inflation. A series of tax amnesties also have been introduced, with little success, because few companies took advantage of them. The 1990 budget also included measures to reduce tax evasion. The names of the nation's top taxpayers are publicized annually in an attempt to "popularize" the activity; in 1991 they included Fiat president Giovanni ("Gianni") Agnelli and the media owner Silvio Berlusconi.…